Managing Risk and Uncertainty
Managing risk in any project (big or small) is about managing uncertainty. Every project contains some risks to varying degrees. Different types of risk include:
- Known risk: somewhat predictable; can be managed proactively
- Known Unknown risk: have not been accurately measured by a risk management system, but are expected
- Unknown Unknown risk: unable to be anticipated/described; cannot be managed proactively; result from the uniqueness of the work
These all contain various level of uncertainty, which is a lack of knowledge of future events (positive or negative) that may affect the project. Your job as a project manager is to decrease those levels, be prepared to deal with them and control the outcomes to the extent possible. You and the project team must plan for potential outcomes that may wind up impacting scope, cost, quality, schedules and so on.
Uncertain circumstances can make recognizing potential risks a challenge. The idea is to control the events that might lead to risk and threaten the delivery of your outcome desired. For example, if you drive your car down a secondary road of gravel, that increases the possibility of a flat tire. You may want to avoid this risk by taking another route; it may add a couple of minutes to your commute, but could potentially save you a few hours in trying to fix a tire.
With respect to the source of uncertainty:
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